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Changing social contracts: Beliefs and dissipative inclusion in Brazil

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  • Alston, Lee J.
  • Melo, Marcus Andre
  • Mueller, Bernardo
  • Pereira, Carlos

Abstract

We link a model of inequality and redistribution where multiple steady states can emerge, to the recent literature on beliefs, and argue that changes in beliefs may shift the equilibrium over time. We present evidence that beliefs are typically very stable over time, yet argue that Brazil has recently undergone a dramatic shift in beliefs which we show is associated with a change in the country’s social contract in the past thirty years. The transition from one social contract to another has taken place through a process which we call ‘dissipative inclusion’, where redistribution and social inclusion are effectively achieved but accompanied by distortions, inefficiencies and rent dissipation.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 41 (2013)
Issue (Month): 1 ()
Pages: 48-65

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Handle: RePEc:eee:jcecon:v:41:y:2013:i:1:p:48-65

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Web page: http://www.elsevier.com/locate/inca/622864

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Keywords: Inequality; Redistribution; Social Contract; Beliefs; Brazil;

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Cited by:
  1. Bernardo Mueller & Pedro Fernando Almeida Nery Ferreira, 2014. "How Judges Think In The Brazilian Supreme Court: Estimating Ideal Points And Identifying Dimensions," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 088, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].

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